Marine mutual launches ABS to reduce claims, not make profit

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16 July 2015

Hall: improving claims records reason behind new entity

Hall: improving members’ claims records reason behind new entity

A mutual marine liability insurer covering the smaller vessel sector has launched an alternative business structure (ABS) to service member and non-member clients, with the object of reducing claims and not generating profit.

CTRL Marine Solutions Limited, wholly owned by Shipowners Mutual Protection and Indemnity (P&I) Association, which insures some 34,000 small and specialist vessels around the world and was founded in 1855, received its ABS licence from the Solicitors Regulation Authority, effective from 1 July.

The ABS’s objective is non-commercial, according to one of its directors.

The ABS will cover risk and legal matters separate from the claims handling, legal assistance and defence services provided to members of The Shipowners’ Club as part of their standard cover, although members can receive discounts.

CTRL Marine’s publicity material says: “In response to over-stretched in-house legal and technical departments, as well as the rising cost and complexity of claims, CTRL Marine Solutions Ltd is a service which manages these matters for their clients in a cost-effective way.”

A director and the head of legal practice is solicitor Britt Pickering, Shipowners’ claims director, who joined the mutual in 2003. Its head of finance and administration is Nigel Hall, Shipowners’ financial controller.

Fellow ABS director, the mutual’s head of loss prevention, Louise Hall (no relation), told Legal Futures the ABS would affect only a “small proportion” of the legal work currently outsourced “We are very conscious that where [the complexity] of a matter requires it, we will outsource to the correct legal service. So not everything is going to CTRL Marine Solutions at all, just the appropriate matters.”

She said the concept for the business emerged from research carried out as part of her MSc in marine surveying, which found that if smaller vessels had safety management systems – which they are not obliged to have – it improved their operations and lowered their claims rate.

“We thought we could offer management system services to our members and non-members, to help improve their standard of operation, which of course then improves the industry as a whole and that of our members, and then we thought ‘why not add the legal as well?’.

“So it’s not out to actually make money; we’re here to help bring up the standard of operation. It’s a unique concept… Even the rates that we are charging non-member clients are very reasonable.”

Ms Hall, who joined the mutual’s loss prevention team in 2006, said it was not part of the plan to attract clients owning larger vessels. “We are aiming this at our small tonnage… That’s what we know, that’s where our experience lies. We insure over 34,000 vessels in the club so that’s where we have our knowledge base.

“They can’t afford to have the big technical departments, the big legal departments; it’s like we are offering to become part of that team so they don’t have the expense of employing people or expensive contractors.”

Ms Pickering said: “We have seen an increased demand for specialist legal assistance in our sector. CTRL-employed solicitors will provide just that but on a more cost-effective basis which is, of course, more in keeping with the spirit of mutuality.”

The SRA granted the ABS a waiver from the separate business rule to enable the mutual to continue to offer “in-house legal advice to its members on matters of business constitution and incidental advice on matters referred from members relating to pre-claim action”.

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